Europe has “maybe six weeks or so” of remaining jet fuel supplies, the head of the International Energy Agency warned Thursday, saying flight cancellations could come soon if oil supplies through the Strait of Hormuz remain blocked by the Iran war.
Fatih Birol, speaking in an Associated Press interview from his Paris office, called the disruption “the largest energy crisis we have ever faced,” noting that nearly 20% of the world’s traded oil normally passes through the waterway in peacetime.
The blockade is creating a double shock to jet fuel supplies: finished product from Gulf refineries can’t reach markets, and crude oil needed by Asian refiners to produce aviation fuel is too being blocked.
Jet fuel prices have roughly doubled since the war began, a sharper increase than seen in gasoline or diesel, forcing airlines worldwide to cut routes, raise fares, add fuel surcharges, and increase baggage fees.
In Asia, some countries have begun rationing fuel and restricting exports, with analyst George Shaw of Kpler calling it “an Asian crisis” where they are in a worse position than any other region.
The world’s top three jet fuel exporters — China, South Korea, and Kuwait — have all been effectively knocked out: China has banned jet fuel exports, South Korea has cut production due to lack of crude, and Kuwait can produce fuel but cannot ship it out.
Birol said the economic pain will be uneven, with poorer countries in Asia, Africa, and Latin America suffering the most, though he added that “no country, no country is immune to this crisis.”
KLM and easyJet said they were not currently experiencing fuel shortages but confirmed they are cutting flights due to rising kerosene costs, with KLM planning to reduce 160 flights from Schiphol next month — about 1% of its European routes.
For more on this story, see IEA Chief Warns of Unprecedented Global Energy Crisis After Hormuz Blockade.
The Airports Council International Europe warned that if stable passage through the Strait of Hormuz does not resume by the end of April, a systemic jet fuel shortage could become reality for the EU, though some analysts doubt shortages would emerge that quickly.
IMF chief Kristalina Georgieva echoed the global reach of the shock, saying twenty percent of oil and gas is stuck in the Strait, depriving primarily Asia but also Europe and other regions, and that “everybody feels the impact.”
She noted that while the conflict is hard on energy exporters, oil importers experience the pain more, and low-income countries — including Pacific Island nations — are most vulnerable, wondering if tankers will reach them at the end of the supply chain.
Georgieva called for energy-saving measures, suggesting lessons from the Covid era: “We learned during Covid to work from home. Why are we not doing it now, to save energy?”
Mohammed Aljadaan, Saudi finance minister, told the IMF debate that official oil prices understate real costs, saying a barrel shown at $90 on screens actually costs $120 to $160 when insurance and shipping are factored in.
France’s central bank chief, François Villeroy de Galhau, said the situation is “more than uncertain — it’s unpredictable and even unknown,” but noted that eurozone inflation started at about 2% before the war, significantly better than the over 5% seen in February 2022.
This follows our earlier report, Trump Warns Iran Over Strait of Hormuz as Israel Plans Energy Strikes.
He added that central bankers know their reaction function — how they will respond to an energy price shock.
How soon could flight cancellations begin due to jet fuel shortages?
Fatih Birol said flight cancellations could come “soon” if the Strait of Hormuz is not reopened within weeks, given Europe’s estimated six weeks or so of remaining jet fuel supplies.
Why are airlines increasing baggage fees and ticket prices?
Airlines are raising baggage fees and fares to offset surging jet fuel costs, which have roughly doubled since the start of the Iran war, a sharper increase than for gasoline or diesel.
Which countries are most vulnerable to the energy price shock?
Low-income countries in Asia, Africa, and Latin America will suffer the most, according to Birol, with Pacific Island nations especially at risk of being cut off from fuel supplies, as noted by IMF chief Georgieva.
